Convergence of Physical and Financial Global Supply Chains

In the world of global trade, the physical, financial, and information networks are becoming increasingly intertwined. Traditionally, these disciplines have not understood each other’s realms to any significant depth. When supply chains were shorter and more domestic, and more work was done inside the enterprise, companies could get away with limited integration between finance and supply chain. (See Figure 1 — Silo’d Global Trade Management)

Now that supply chains are global, lead times elongated, and supply chain costs up, these functions can no longer exist independently. Financial-Supply Chain convergence requires that supply chain personnel and fi nancial personnel start working more closely. Supply chain and finance people have to learn how to speak each other’s language. The CFO needs to learn what an ASN is. The VP of Supply Chain needs to learn about working capital management. Payment processes must be integrated with inventory and logistics processes.